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17-April-2009
China Economic Scan - Your daily update on the Chinese
economy.
In this edition: In Q1 China GDP grew 6.1%, CPI fell 1.2%,
Retail sales rose 15%; bank lending may slow for the rest of 2009,
China bought more US securities early this year, Hong Kong Mortgage
Corp NPAT fell 18%, Chinese stocks fall slightly as GDP below
consensus 6.2% estimate.
Top 5 headlines
SPECIAL: National
Economy: Positive Changes Emerged in the First Quarter of 2009
- National Bureau of Statistics official release: "the gross
domestic product (GDP) of China in the first quarter of this year
was 6,574.5 billion yuan, a year-on-year increase of 6.1%,
which was 4.5 percentage points lower than that in the same period
last year."
- Agriculture: expected planting area for grain to reach 108.14m
hectares (summer grain +1.27% to 27.16m hectares; autumn crops
+1.16% to 75.12m hectares), output of pork, beef and mutton +6% to
16.15 million tons.
- Industrial production: total value added by industrial
enterprises was up 5.1% year on year (higher in march at 8.3% than
3.8% than the first two months); growth of heavy industry was
4.5%, 6.8% for light industry.
- Fixed asset investment: Q1 fixed asset investment grew 28.8% YoY
to 2,812.9 billion yuan.
- Retail sales: Q1 retail sales rose 15% to 2,939.8 billion
yuan (real growth of 15.9%); top gainers were furniture +24.1%,
construction/decoration materials +20.2%, vehicles +11.1%.
- CPI: Q1 Consumer Price Index down, -0.6% QoQ, -1.2% YoY.
- Foreign trade: total value of imports and exports in Q1 down
-24.9% to US$428.7 billion; exports US$245.5 billion -19.7%,
imports US$183.2 billion -30.9%; trade surplus US$62.3 billion.
FDI (foreign direct investment) was down 20.4% to US$21.8 billion in
Q1.
- Employment: in the first two months employment in urban areas
grew by 1.62 million. Per capita disposable income was 4,834 yuan
in Q1 YoY growth of 10.2%.
- Money Supply: M2 +25.5% to 53.1 trillion yuan, M1 +17% to 17.7
trillion yuan, M0 +10.9% to 3,374.6 billion yuan. Loans by
financial institutions up 4,581 billion yuan to 34,955 billion
yuan; deposits up 5,616 billion to 52,262 billion yuan.
China
bank lending may slow, but not dramatically
- Chinese banks made new loans of 4.58 trillion yuan ($670
billion) in Q1, more than 90% of a government target of 5 trillion
yuan for the entire year (total bank lending was 4.9 trillion in
2008).
- Core Pacific-Yamaichi International analyst, Yuk Kei Lee, said:
"I think because loan growth for the first quarter is very
strong, the regulators need to check it, and starting from second
quarter, loan growth will slow down a bit,".
- J.P. Morgan economist, Qian Wang, noted "If China's
fixed-asset investment in 2009 reaches 15 to 16 trillion yuan, for
example, the market should not be surprised if new loans in 2009
is as high as 7 to 8 trillion yuan."
China
Bought More U.S. Securities Even Amid Concerns
- China increased its purchases of American securities in
February, it remains the largest foreign holder of Treasuries
after its holdings grew 0.6% to $744.2 billion. China's purchases
did slow however, and were mostly in short-term Treasury bills.
- Bank of Tokyo-Mitsubishi UFJ Ltd chief financial economist,
Chris Rupkey, said “If they [China] are going to boost their
economy by selling consumer goods to the U.S., accepting U.S.
Treasuries is part of their bargain with the devil,”
- Brown Brothers Harriman & Co senior currency strategist, Win
Thin, said “we are not seeing any wholesale dumping of dollar
assets by China.”...“China and the U.S. have a symbiotic
relationship,” Thin said. “We need each other.”
Hong
Kong Mortgage Corporation net profits fall 18% in 2008
- The government-owned Hong Kong Mortgage
Corporation Limited (HKMC) said its NPAT fell 18% in 2008 to
HK$605 million (US$78.14 million).
- HKMC's return on equity was 10.5% and the
capital-to-assets ratio remained strong at 8.7%, above the minimum
requirement of 5%.
- HKMC said its net interest income rose HK$61
million (US$7. 88 million) to HK$710 million (US$91.7 million) due
to expansion of it's loan portfolio but net interest margin of
average interest-earning assets dropped to 1.3% due to rising
costs for hedging and funding.
China’s
Stock Index Falls for First Time in Six Days on Economy
- The Shanghai Composite Index dropped 0.1% to 2,534.13, the
Shenzhen Component fell 0.14% to 9,711.36, and Hong Kong's Hang
Seng fell 0.55% to 15,582.99.
- Shenhua -3.1% (24.63 yuan), China Coal -3.7% (10.81 yuan) the
company cut production by 4.6% in Q1. Datong Coal Industry Co -3%
(26.12 yuan), Yunnan Copper -0.6% (22.03 yuan) - posted a 2008
loss of 2.79 billion yuan on lower metal prices and writedown of
inventories.
- China Southern -3.1% (5.98 yuan) - rating was cut to “sell”
from “buy” at Deutsche Bank, cited risks from an uncertain
Guangdong province economy and carrier’s ability to contain
costs. China Cosco, +2.5% (13.47 yuan), China Shipping +1.5%
(14.58 yuan).
Financial Indicators:
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